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Friday, 20 May 2016

Economic and Strategic significance of Indian Ocean Region.

Indian Ocean is one of the most concerted area where global economic activity and political activity conjoin.Prior to expounding the economic and strategic significance of Indian Ocean Region (IOR), I need to digress for a while to give a picture of the geography of IOR.

It is the third largest ocean of the world being proximate to Asia in its north, Africa to its west, Australia to its east while Antarctica in the south.It extends from the Bay of Bengal in north to Antarctica in south covering a range of 9600 kilometers and from Southern Africa in west to Western Australia in east with an estimated range of 7800 kilometers. The Indian ocean total area includes Andaman sea, Arabian sea, Bay of Bengal, Flores sea, Great Australian Bight, Gulf of Aden, Gulf of Oman, Java sea, Mozambique Channel, Persian Gulf, Red sea, Timor sea and other tributary water bodies. It also contains many small island nations such as the Madagascar, the Seychelles, Reunion island, Maldives Mauritius and Sri Lanka while a group of islands forming Indonesia is located in its east.

So, why is it considered to be of significance from economic and geopolitical perspective. Answer lies in the enormous trade that occur through the IOR. The economic development and population explosion of the littoral countries has led to an increase in the trade through this region. The major products commerced through this route encompass iron, coal, rubber, tea and crude oil. Iron ore from Western Australia states, India and South Africa is exported to Japan, while coal is exported to UK from Australia through this route. Processed sea food is emerging as a major export item, though petrolium dominates commerce as IOR is chief throughway for transport of petrolium products to UK, America and East Asia.

This trade route is also known for being dangerous due to the presence of a number of critical choke points. A few of the significant choke points are Strait of Hormuz, Strait of Malacca and Bab-el-Mandeb. More than 80% of the world's seaborne trade in oil transits through Indian Ocean choke points. Strait of Hormuz is the only waterways which gives an outlet to the major oil producing nations such as UAE, Oman, Iran etc. It is very narrow with two 3 km channels exclusively used for inbound and outbound of vessels. Any disruption in the Strait of Hormuz may lead to jacking up of oil prices causing inflation. It may also lead to non-availability of energy resources altogether in a number of countries.

Percentage of the World oil shipment through Indian Ocean choke points.
Courtesy : wsws.org

Strait of Malacca is a strait that lies between Singapore, Malaysia and Indonesia. This route is the shortest routes that connects the Persian Gulf and its market in Asia. This strait connects the Indian Ocean with the South China sea and the Pacific Ocean. Thus, it carries the crude oil coming from the Persian Gulf by crossing Indian Ocean through the Strait of Malacca to the South China sea and Pacific Ocean towards China, South Kora, Japan and other Pacific Rim states. Again, any disruption in this channel will lead to rise in the freight cost and also delay in shipping as alternate route is substantially very long.

Bab-el-Mandeb is the third most busiest and crucial throughway after Strait of Hormuz and Strait of Malacca. It connects Indian Ocean with the Red Sea by the way of Gulf of Aden. This strait carries most of the European crude oil imports as it allows the tanker to carry oil from the Persian Gulf through the Suez Canal and then through pipeline to Europe and USA. In the event of closure of Bab -el-Mandeb, all the tankers have to be routed through Cape of Good Hope to Europe and America. This will again jack up the shipping cost besides adding 4750 nautical miles and 12-14 extra days.

Apart from all the trade that occurs through this region, Indian Ocean is becoming increasingly important with discoveries of oil and gas reserves. Recently, China has proposed India for joint exploration of Indian Ocean with its deep sea mining technology.

From all this, we can posit that Indian Ocean is becoming hub of global economic activity and hence this route is also of strategic importance with many major countries having their naval bases in this region. US uses the island of Diego Garcia as a major air-naval base.France, meanwhile, maintains a significant presence in the Indian Ocean with naval bases in Djibouti, Reunion and Abu Dhabi. India has a huge military presence in Andaman and Nicobar island. India also has established listening posts in the Seychelles, Madagascar and Mauritius. India has also included Maldives under its security grid.

Courtesy : cimsec.org

In a nut shell, with rapid increase in energy demand across the globe and Indian Ocean being immensely rich in that, Indian Ocean is going to be more significant in global politics and economic arena than it has ever been before.


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